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- Home insurance has three components: home, liability and protection of personal property.
- Personal liability protects homeowners if someone is injured on their property and sues for damages.
- A basic home insurance policy has a liability limit of $ 100,000, but you can increase it or purchase an umbrella policy.
- See Insider’s Picks for the Best Home Insurance Companies.
Home insurance protects your home, your property, and provides liability coverage for injuries that occur on your property. Home insurance has three components: home coverage, personal property coverage and liability coverage.
What is personal liability insurance?
If the dog bites a guest, the mailman slips on your catwalk, or someone is injured using your pool, liability insurance has you covered.
Home insurance offers homeowners protection against personal liability if someone is injured on your property or sues for damages. Some carriers offer identity theft and cyber liability as part of their personal liability coverage or as an add-on endorsement.
There are limits to standard personal liability coverage depending on your policy and insurance company. According to Allstate, basic homeowners’ liability insurance policies typically have a coverage limit of $ 100,000.
*Available as additional coverage if not part of the policy
** Flood insurance is available from NFIP and licensed insurers
*** If you live in hurricane or tornado areas, an additional windstorm pilot may be required
Increase your liability coverage if you have a swimming pool or a pet
Having certain items, such as a swimming pool or a trampoline, can increase your liability as an owner. In addition, exotic pets and certain breeds of dogs are excluded from some home insurance policies. Some home insurance companies do not offer coverage based on the size and breed of the dog, especially large dogs and breeds considered aggressive. Pit bulls are usually at the top of the list of dog breeds excluded from policy.
“A swimming pool is considered an ‘attractive nuisance’ and will increase your risk of liability,” according to the Insurance Information Institute (III). The Institute recommends increasing your liability coverage to “at least $ 300,000 to $ 500,000” if you have a swimming pool.
As with swimming pools, some home insurers see trampolines as an “attractive nuisance” and exclude them from policies. Other carriers have specific language for trampolines, requiring a net or them to be anchored to the ground depending on your condition, according to Steve Wilson, senior underwriting manager at Hippo Insurance.
An umbrella policy is additional liability coverage that is available as an additional rider to your home or tenant insurance. Umbrella coverage begins after you have exhausted your personal liability coverage limit.
Another option if you have a restricted breed and cannot get an umbrella policy to cover your pet is canine liability insurance. Dog liability insurance provides coverage if your dog bites or attacks someone. It’s a separate policy that’s useful if your home insurance doesn’t offer coverage for your breed.
How much does liability insurance cost for homeowners?
The average annual home insurance premium in the United States in 2017 was $ 1,211, according to the National Association of Insurance Commissioners (NAIC).
As mentioned earlier, the standard homeowners liability coverage is $ 100,000. The cost to increase the amounts of your liability coverage depends on your home and location, but it is relatively inexpensive.
A million dollar umbrella policy costs between $ 150 and $ 300 per year, according to the Insurance Information Institute. However, the Institute notes that most carriers require owners to have at least $ 300,000 in liability insurance before selling them an umbrella policy.
Ronda Lee is Associate Insurance Editor at Personal Finance Insider and covers consumer life, auto, home and tenant insurance. She is also a licensed lawyer who has practiced insurance litigation and defense.